A judge recently granted class-action status to a group of consumers who filed a lawsuit against Union Bank, claiming the San Francisco-based institution manipulated the order of transactions in order to maximize overdraft fees. Consumer advocates say that if the consumers prevail, it will send a strong message to other banks that they can’t get away with rigging the system in their favor.
The lawsuit charges that Union Bank processed each day’s transactions by amount, largest to smallest, rather than chronologically. Here’s how this hurt customers: If I had $75 in my account and spent $10 buying lunch, then bought $100 worth of groceries in the evening, I would expect to overdraw only once — after grocery shopping, when the $100 I spent was more than the $65 left in my account. But Union Bank ordered those charges from large to small, which means I would actually overdraw twice — once when the grocery transaction was processed, then again when my lunch purchase was processed.